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Sunday 25 August 2019

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ABN AMRO fund prepares members for Brexit impacts

Written by Sunniva Kolostyak
12/08/2019

The pension fund of Dutch bank ABN AMRO has told its members that Brexit could have adverse consequences for the fund whether or not the UK leaves the EU with a deal.

The pension fund said Brexit is a volatile element for financial markets while affecting the situation for service providers from the UK such as asset managers.

ABN AMRO said it in response has completed a step-by-step plan to manage app processes. This has included conducting an inventory check of all parties affected, consulting stakeholders to ensure that services can continue in every possible scenario and setting up backup plans if services cannot proceed after Brexit.

“One of the biggest risks of the Brexit is the potential turbulence in the financial markets, which can have adverse consequences for pension funds and therefore also for our fund,” ABN AMRO said.

The pension fund explained that Brexit leads to the renegotiation of trade agreements which include investment and payment services and required transaction documentation, adding turbulence, affecting the value of the pound sterling and the settlement of transactions.

Brexit will also affect the situation for UK service providers operating in the EU with European passports.

“A consequence of Brexit may be that such a passport is no longer available to them, resulting in service providers no longer being authorised to provide services in the EU. For our pension fund, this mainly concerns British banks with which we have a trading relationship and asset managers who manage parts of the investments.”

There are three scenarios for the problem with the European passport, ABN AMRO said: Mutual acceptance between the EU and the UK in terms of supervision, allowing British service providers to continue to offer services in the EU; British service providers requesting permission to offer services in individual countries; and British service providers setting up a European entity for which a European passport can be requested, using the entity to provide its services.

“We expect that asset management agreements will be limited in all three scenarios. This is on the condition that the relevant asset managers in the UK continue to meet the requirements for offering the services in the Netherlands.”



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